Asked by Anonymous
Updated on 04 May 2019
If experience in investment means buying stocks, then theoretically everyone has zero experience in investment when buying their first stock.
to rephrase your question, it should be how much financial knowledge should i have before i buy my first stock.
and even this question will be hard to answer since it will be like asking how many driving lessons do i need before i can drive on the roads. there is no right or wrong answer. each one is different and only by taking the first step will you know if you can or cannot
If you are going for a start you can look into STI ETF. Quite stable dont really need much 'experience'. That being said you are still expected to do some simple research on the background, understand what are ETFs etc.
Moving on you can consider blue chip stocks. Do your own research and look into the company finances before you enter the market.
Everyone starts at a certain point. If you are new, I'll suggest investing in more stable funds/stocks that comes with lower risks though it also means lower returns. From there then gain more experience and understand how investment works then can venture further.
If you are really really concerned about losing money or about not making a wrong/bad investment or just want to test out your trading strategy and gain confidence before you put money into the market, you should consider starting with demo accounts or stock simulators while continuing to build up your investment funds.
Although it is different emotionally from putting actual money, it can offer a valuable learning opportunity, if your mindset is correct. Granted you won’t be able to gain real market returns, I believe it will help you develop your investing mindset and strategy for future gains.
Pretty similar to why we have simulators/practice sessions in training before going to actual training nowadays. Train “muscle memory” so that it becomes natural.
Gain some confidence on the simulators for a period of time then start doing actual investments. All the best on your investment journey!
Theoretically, everyone starts from zero with zero experience. The question is how willing and how prepared are you willing to make the move. To define experience is how many knowledge you manage to internalise, how many actions you take, and how many mistakes you managed to learn from.
If you exclude Sti index as a stock, I would like to ask how confident, ready, or prepared to execute and mentally prepare to loss that amount of money. What is your game plan and how are you going to enter or exit or how often reviewing the holding stocks? It is not practical to look at it everyday. By preparing for the worst, you could plan out how to prevent or potentially reduce your risk. Best, not to never lose the money.
P. S From someone who just started. Screw up my starting strategy. Too bad, can't rewind time
Rather, how much are you willing to lose. If you never buy your first stock, you’ll never gain experience - chicken and egg problem. 😂
Fortune favours the ignorant, ie beginner’s luck. You may make money through fluke, but this won’t be what you want. Otherwise, you would have depended on striking lottery every week.
Throughout this, then you can go further and ask yourself, why did this stock went up or down? What’s the reason? Fundamentally rotting away, or its a trend thingy? What can you learn such that you would not make the same mistake or take advantage of the price differences to profit? Even experienced professionals such as Warren Buffett and George Soros also lost money at one point in time. They learnt from their mistakes.
Some may say, virtual trading before investing and I agree. However, there’s a limit to how much virtual experience can bring you, because the money isn’t real and therefore, how you trade/invest in it may not represent how you would do so in real life! Having 100k virtual money and allocating 10k portions vs having 10k and thinking whether to all in or not are two completely different feelings.
At the end of the day, try and invest for real and enjoy the journey.
The best teacher is the market itself. You can do all the paper trades you want to validate your strategy but without skin in the game, it is like playing mahjong with no stakes. You will buy and sell freely without pressure.
In my experience the pressure facing potential losses truly tests your conviction and mental fortitude, something paper trading does not prepare you for.